September 21, 1999 5:00 AM PDT

Final arguments in Microsoft antitrust trial

WASHINGTON--In final arguments at the antitrust trial here, Microsoft will contend the government put on a good show but failed to prove its case against the software maker.

Microsoft may score Microsoft's day in court a few points, antitrust experts say, but the case is largely on the side of the government. The real question is: Will the government be convincing enough to win any meaningful remedy?

Both sides will present final arguments in the landmark case, in which the Justice Department and 19 states allege Microsoft unfairly used its Windows monopoly against browser rival Netscape Communications, now owned by America Online.

In many ways, the day's themes will be little different than the trial testimony. "They're going to be doing the same thing they've done throughout the whole trial," said Joe Sims, an antitrust attorney with Jones, Day, Reavis & Pogue. "Microsoft is going to try to be technical and precise and the government's going to paint in broad brushes--and they'll pass each other in the night as they usually do."

"Each side has some interesting cases behind them, and what this will do is force the court to choose between them," said Bill Kovacic, an antitrust professor at George Washington University.

Microsoft will assert the government focused on court theatrics rather than the hard facts of the case, particularly pertaining to Internet Explorer browser bundling issues and allegations Microsoft colluded to dominate the market and cut off Netscape from key avenues of distribution.

"Their strategy was to get these 'gotchas' in that ignored direct testimony," a Microsoft attorney said yesterday in an interview with CNET News.com. "Now at this point in the trial, when substance matters, it's there uncontested."

The Justice Department wouldn't comment on its strategy for today. "We will make our closing arguments in court," said a DOJ spokesperson, in response to Microsoft press briefings outlining its closing strategy.

The government's case is strongest on the broader issue of misusing monopoly power and the use of exclusive contracts, said antitrust experts.

The government alleges Microsoft used predatory tactics to squash Netscape's market-leading Netscape browser, perceiving it a threat to the Windows monopoly. Microsoft did this in part through exclusive contracts that forced PC manufacturers to favor Internet Explorer over Navigator, the government contends.

Microsoft's position is better in the areas of collusion, predatory pricing, and bundling the browser with Windows 95 and 98, said antitrust experts.

Dana Hayter, intellectual property and antitrust attorney with Fenwick & West LLP, doesn't see that the government largely ignored important issues.

Justice Department lead attorney David Boies consistently used email and other documents to impugn the credibility of Microsoft witnesses, and he caught Microsoft senior vice president Jim Allchin in an embarrassing gaffe with video evidence. "There is good evidence on the government's side, and they've done a good job of discrediting witnesses on Microsoft side combined with some pretty good theatrics," said Hayter.

Due to an expectedly large turnout, U.S. District Judge Thomas Penfield Jackson will hear the closing arguments in a larger courtroom typically reserved for swearing in new judges.

Microsoft's technical, points-of-law approach proved successful in appealing Jackson's earlier decision that Microsoft violated a 1995 consent decree with the government. It also established some legal precedent for exonerating Microsoft from the bundling issue, said Microsoft attorneys and antitrust experts.

Additionally, there are several areas where the government's position is weak and where Microsoft's behavior is ambiguous, said legal experts.

"There's a trend in a number of recent cases that when the behavior in question is ambiguous, the best way to resolve the ambiguity is to see actual adverse effects, the impact on consumers," said Kovacic. "That's not an impossible story for the government to tell, but a tricky one."

Microsoft will argue its actions had no adverse affect on consumers and that the case simply proves the company is an aggressive competitor, both in the marketplace and the courtroom. Under the law, it is not illegal to be a monopoly just to exercise monopoly power in an exclusionary fashion or to leverage the monopoly into new markets.

"Even a monopoly is free to compete aggressively," said the Microsoft attorney. "I read in the press how Microsoft isn't contrite. We're not going to church here. It's not confession. It's litigation."

Many issues will be subject to the discretion of Judge Jackson. On the issue of blocking Netscape's ability to distribute Navigator, for example, he must weigh what is acceptable competition under the law.

Antitrust experts likened Microsoft's competitive behavior to forcing users to take Amtrak to get Navigator while they could go by plane to get Internet Explorer. Judge Jackson could view this as restrictive behavior or aggressive but not exclusionary fair competition.

Many antitrust expert favor the government's broad stroke approach, which focuses more on wrongdoing than picayune matters of law, as going farthest with Judge Jackson.

On the facts of the case, the government's position is stronger than Microsoft's case law, letter-of-the-law approach, said many antitrust experts.

"If I was a betting person I would bet on the DOJ," said Sims. "But the question is how broad will the win be, how well will it stand on appeal, and what are the remedies."

No matter what happens, no side is likely to win all points, and ultimately there could be no clear winner.

"The most likely outcome is the judge finds a violation of some type, but does not embrace all of the government's conduct allegations," said Kovacic. "And because he only embraces a few of them, this establishes a relatively limited platform on which to build a remedy."

Many observers expect a relatively quick judgment from Jackson; many also expect the case will go to the Supreme Court.

 

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